Many of our clients who are separating will ask us how assets are divided in a divorce. When it comes to asset division in Australia, there are some key things you should know.
Let’s take a closer look at how assets are divided in a divorce in Australia.
Is there a formula for dividing assets after divorce?
If a Binding Financial Agreement (BFA) already exists, it will certainly make life easier for both spouses, as all the terms would be set out in there.
But if no BFA is in place at the time of separation, dividing assets in a divorce can become a tricky business.
As all marriages and breakups are unique and each one comes with its own individual circumstances, there is no one set formula to decide as to who gets what.
This is usually a very complex process which compounds the level of stress and tension that may already exist between the separating partners.
Seeking legal assistance and attending family law mediation is therefore strongly recommended on the division of assets in divorce.
What factors does the Family Court consider when it comes to how to divide assets in a divorce?
The Family Court of Australia provides certain guidelines on the division of assets in a divorce, all based on being just and equitable.
This does not necessarily mean that all assets will be split straight down the middle, as many people may think. Assuming that no BFA is in place, the Family Court will take numerous factors into consideration.
All these factors will depend entirely on the individual circumstances of each family and can most certainly be totally different from other cases you may have read or heard about.
Some of these factors may include the following:
- Calculating the value of all assets and debts.
- Assessing the direct financial contributions of each partner.
- Assessing indirect financial contributions of each partner, which may include gifts and inheritances. It must be noted however, that credit is given to the party bringing in these assets to the relationship
- Assessing other contributions to the relationship, such as keeping home, caring for children etc.
- Looking at possible future requirements, which may include health, age, financial resources and earning capacity, and care of children.
- The length of the relationship.
All these factors also apply to de facto relationships, not just married couples, provided that the relationship has lasted for more than two years, or a child is born from this relationship.
How are assets defined?
Assets are defined as ALL assets and debts owned by both parties, regardless on whose names they are registered.
They include all properties (e.g. the family home, investment properties), bank accounts, investments, cash on hand, businesses, partnerships or trusts, insurance policies, superannuation, vehicles, personal assets and all debt such as mortgage, loans, credit card or any other personal det.
In other words, everything goes into the pool.
Both parties are legally bound to provide full and frank disclosure of ALL their assets and substantiate their values with official documentation. If it is discovered at a later date that either partner failed to disclose an asset or provided false information, the order may well be set aside by the Court.
Does my superannuation count as an asset when we divorce?
Absolutely, it can! It must however be noted that superannuation will be subject to the terms of each policy, meaning that neither partner may access any payments, until they become due. You also have to be VERY careful in Western Australia, because we have different laws about superannuation splitting for de facto couples. There is talk that the law is going to change, to enable superannuation to be split between de facto couples in WA. However, that has not occurred yet.
Any superannuation splitting orders will also depend on the length of the relationship, and the contributions each party has made.
Does a court have to decide on how to divide our assets when we divorce?
Not at all. The vast majority of divorces in Australia do not end up in the Court but are settled in a fair and equitable manner by lawyers and through family mediation.
Couples are strongly advised to settle as many disputes as possible, making the entire process less unpleasant and stressful for the whole family. Only issues that may not be settled amicably by lawyers or through mediation, will have to be decided upon by a Judge.
Need a qualified divorce lawyer in Perth to help you through your divorce and fair division of your assets?
Get in touch now by booking a free 15 minute phone consultation with one of our experienced family lawyers in Perth.